NEW YORK–There has been a substantial decline in the number of cash transactions as a result of the coronavirus pandemic, and the overall decline in cash volume will be noticeable in 2020, according to a new analysis.
The decline in cash transactions is related in part to the overall decline in retail transactions, noted GlobalData in a new report.
Pre-COVID-19, GlobalData said it had forecast total transactions rising at a compound annual growth rate (CAGR) of 7.6% between 2019 and 2023. That projection has now been revised to 4.5%, mainly due to the CAGR for cash payments dropping from 2.5% to -1.5% in the same period.
“The decline in overall spending will be somewhat offset by a rise in online payments,” said Ravi Sharma, banking and payments analyst at GlobalData. “Wary consumers will stay home and use the online channel to purchase goods in order to avoid exposing themselves to the disease.”
Further Declines
GlobalData is predicting steady declines for cash payments through 2023, but “card payments will witness a consistent increase, albeit at a slower CAGR than originally predicted before the pandemic. Growth will be slowed by availability of goods and many vendors closing.”
The new forecast added that COVID-19 is likely to have a lasting impact on consumer behavior, as mobile wallets and especially contactless payments will likely be more widely used.
“While the uptake of contactless card payments in the U.S. has been relatively slow, this crisis should give a push to these payments, since they allow consumers to avoid handling cash or point-of-sale terminals,” said Sharma.